Bubbles Burst

Is the NASDAQ another bubble? (Want to ride the roller coaster? Clink here.)

Of course, it’s a bubble–even if it’s not ready to pop–but it’s not just the NASDAQ. There’s no fundamental reason for stocks to be breaking records. The economy at best stumbles along.

So why are all the indexs up? Supply and demand. (I aced college economics even if the Smart Guys in Washington didn’t.)

The Fed has been flooding the economy with new money for most of this decade. But it doesn’t come to you or me, it goes to the banks. Where are they putting it? In bonds underwritten by stocks, bonds and commodities.

China has a stock bubble going, too. When they both burst, each country will blame the other. Just as the democrats and Republicans blame each other for everything.

Everything on Wall Street is up (except oil because that supply is burgeoning), and precious little of it trickles down to Main Street

The Fed created this bubble. Bubbles eventually burst.

Happy New Year, Wall Street

Investors should be happy with President Obama, if six straight years of climbing markets are an indicator. And in this case they are, because Obama’s Fed (and he owns the Fed as no other President has) has kept the easy money spigot wide open for six years. (George Bush opened the spigot in 2008; so both parties deserve blame and/or credit.)

Only this last Fall did Yellen finally close the tap. But “these things must be done delicately.” And she did … with fanfare, gradually and in stages, so the markets could adjust. And, of course, somehow she and Obama managed to match the closing of the easy money tap with the opening of the cheap oil tap—over which you’d think they had no control.

If that doesn’t buy lower Manhattan votes, I don’t know what would. (Some investors will complain that cheap oil ruins some investments, even as they rush to the ventures who will profit from cheap energy. They’ll tell us which those are after they’re fully invested.)

If you’re a politician, it’s whatever works.

Musings

DOJ says native Americans can grow and sell pot. You know where this is going: “Native American” Casinos, Part Two. Remember growing and selling marijuana is against US law. So, what is DOJ doing? (Holder’s parting shot? Not yet.)

No one expects Putin to grow up, do they? So far, the Russians love him; don’t expect change from within. Sanctions have hurt him, but sanctions (and paranoia) are what triggered the attack on Pearl Harbor. And the Russians do paranoid better than anyone.

Obama’s current unpopularity will work for him in the long run. Anything he accomplishes the next two years will seem a big deal. And the economy is finally improving, while everyone else’s economies are going south. So he’ll take credit for that.

The Summer Olympics in Washington, D. C. during an election year (2024)? What can they be thinking? (That maybe the games will distract us from The Game.)

Self-fulfilling Prophesies

Why did the same intelligence community overestimate the threat of Hussein’s Iraq then underestimate the threat of ISIL?

Simple. They’re human. They tailored their findings to their perceived expectations of the then President. Neither Bush nor Obama (nor the public) should blame them for catering to their expectations when each made his preferences so clear.

Then how do we get better intelligence? Elect a chief executive with enough integrity that his staff will tell him the truth, rather than what they think he wants to hear.

No, I can’t name a modern President who did that. Maybe Truman or Eisenhower, if you accept them as modern. Certainly not JFK or Nixon. I really don’t think Reagan or Clinton.

Integrity is an endangered specie inside the Beltway, perhaps due to lack of safe habitat.

No Wonder No One Trusts America.

For the last fifty years, America’s allies have learned that we aren’t dependable. We abandoned the Shah of Iran, after we engineered the coup which brought him to power. We declared victory in Southeast Asia and abandoned South Vietnam.

Russian tanks are showing up in Ukraine. Tanks. You know, those really big military things. Things which your neighborhood revolutionary—even in Europe—is not apt

War of Words

“History teaches, perhaps, very few clear lessons. But surely one such lesson learned by the world at great cost is that aggression, unopposed, becomes a contagious disease,” said Jimmy Carter in 1980, responding to the Soviet invasion of Afghanistan. A Washington Post headline reads, “Forget Reagan–we’re starting to miss Carter.”

“President Obama and European leaders are ratcheting up their rhetoric against Russia. Too bad Vladimir Putin is a man of action who hasn’t seen anything worth stopping his assault on Ukraine,” opined the Wall Street Journal.

Will Rogers said one way to prevent war was to ban peace conferences, because we use them to substitute words for action. We’re certainly trying to talk Russia to sleep. (That, and cancelling a few visas.)

All our talk may have the Russians oligarchs “concerned” but not Vlad the Imperialist.

Being Played Like Fish

Putin is enlarging his fig leaf, calling what happened in Ukraine and “unconstitutional coup.” Of course it was; all coups are unconstitutional. As are all revolutions.

Putin hopes we’re so scared about how crazy he is, that we’ll roll over and give him what he wants: leaving us thinking we’ve put the genie back in the bottle. No, we’ll just be feeding his ego, where he’s most dangerous. He has the hook set, and now he’s placing us like a trout.

Like Germany in the 1930s, Russia can get a lot of domestic traction out of saying they were betrayed in the previous war and it’ll be better this time. Putin would happily restart the Cold War. Russia (the Soviet Union) wasn’t loved, but they were feared. Machiavelli wrote, best to be both; but ,if you can’t, choose to be feared.

Obama, Merkel, Hollande, et al. are completely outclassed. They’re politicians, so they do what politicians do: talk and bargain. We need a leader. A Reagan, or better a Churchill. Remember: both those men were attacked as fools and warmongers even as they were facing down (or defeating) the despots of their day. Yes, they got some domestic politics wrong, but they were spot on about the bad guys.

“It is a contemptible thing for a great nation to render itself impotent in international action, whether because of cowardice or sloth, or sheer inability or unwillingness to look into the future.” Theodore Roosevelt

Look at Putin; think Hitler. Or Stalin.

 

1930s Redux

We’re watching a replay of Hitler’s absorption of central Europe in the 1930s. Obama, Biden, Kerry et al. are as ineffective containing Putin as Neville Chamberlain was with Hitler.

Obama isn’t singly to blame for the Ukraine mess (though Hagels’ Defense reductions are looking ill-timed); Bush did as poorly with Russia’s invasion of Georgia in 2008. We have learned nothing.

The price of oil, of course, bounced upward. That helps Putin. Russia’s economy is heavily dependent on energy revenue. That, not a military confrontation, is where they are most vulnerable and where we should counter-attack.

Threatening does no good; we should say what we are doing and do it. This whole thing was planned and executed by Putin. If we don’t do something–I mean really do something–he’ll only get worse.